SMEs to generate additional £16bn annually for the UK economy and create 200,000 jobs by 2020
Small businesses are making big money for the UK economy. £16bn will be generated annually by the British cities which have the best growth prospects for SMEs, with more than a 200,000 jobs created by 2020, according to a new report by npower Business and Capital Economics.
SMEs are already keeping more than half of us in the UK in work, with 16.8 million people clocking in to one daily. It’s therefore no surprise they account for almost four-fifths of the increase in private sector employment since 2010, contributing significantly to UK economic and employment growth.
There are now huge opportunities for SME growth. Capital Economics expects the British economy to grow at an average of around 2% over the next five years. This is despite the dampened national growth forecasts following the recent vote to leave the EU.
The npower Business SME Growth Forecast Index has identified the City of London, Bristol, Leeds, Birmingham, Brighton and Hove, and Manchester as the cities with best potential for SMEs in the next five years. Workforce skills, property costs, government policy and broadband speed are just some of the key factors that influence the underlying business environment that is vital for supporting SME growth.
Top cities for SME growth prospects
City of London:
Over the next five years, City of London SMEs will thrive due to a strong economic growth outlook, access to a highly skilled workforce and because of attractive living conditions in the region.
The City of London has existing clusters in three of the ten fastest growing industries (head office, office administration and financial services support). Brexit should not affect its status as Europe’s pre-eminent global finance centre. SMEs are predicted to boost employment in the square mile by 36,000 by 2020.
Fast growing SME industries in Bristol include television, video and music production and financial services support.
SMEs contribution to Bristol’s economy is set to increase by £1.4bn to £11.1bn per annum by 2020. They will also boost employment in the city by 12,000 over the next five years.
SMEs in Bristol will benefit from the strong economic outlook in the South West. This will be backed by relatively low business rates, good broadband connectivity and an enterprise zone in the city.
SMEs in Leeds gain from relatively low business rates & property prices and access to a local airport. The city has existing clusters in three of the ten fastest growing industries (office administration, finance support services and other professional and technical sectors).
Annual output of the SME sector in Leeds will be boosted by £1.9bn by 2020. They are also set to create around 4,000 jobs each year for the next five years.
Birmingham: Birmingham’s SME growth prospects are supported by the city’s enterprise zone, relatively low living costs and favourable demographics. The city has existing clusters in two of the 10 fastest growing SME industries; health and education.
SMEs in the city are set to contribute £13.8bn annually to the economy by 2020, boosting employment by 18,000 over the next five years.
Brighton and Hove:
Businesses in the city benefit from high quality broadband connections, access to a skilled workforce and favourable demographics.
SMEs contribution to Brighton and Hove’s economy is set to increase to £3.9bn per annum by 2020. They will also boost employment in the city by 6,000 over the next five years.
Health, creative and TV & music production are the emerging SME industries in Manchester. The city benefits from favourable demographics, low business rates and property prices (relative to other cities), and the enterprise zone is anchored by the airport.
SMEs will contribute £12bn to the economy every year (up from £10.5bn) and create 16,000 new jobs by 2020.
Philip Scholes, head of npower Business, said:
“SMEs are critical for future economic growth in the UK. These businesses have been the backbone of the country in recent years and, as this research shows, there is significant opportunity for them to grow further over the next few years.
“At npower Business, we are committed to working closely with SMEs to help them succeed. Larger businesses have a responsibility to acknowledge and support the contribution they make to the economy and to regions across the UK.”
Dale Murray, CBE and board advisor at the Centre for Entrepreneurs, said:
“The report highlights the fantastic opportunities around the UK for entrepreneurs to start new businesses and to expand existing ones.
“Growth of SMEs will be crucial to the British economy over the next five years as they create tens of thousands of jobs. Policy makers must recognise how vital business rates, living conditions and workforce skills are to attracting SMEs and do everything they can to support them.”